Associate Professor at the University of Waikato Management School, New Zealand. Kathryn’s passion is to understand the paradigm shift to a collaborative economy. She uses biological analogies of living systems to understanding how groupings of organisations can interact and co-exist as emergent structures. Kathryn’s research work centres on collaborative forms of strategic alliances, networks and clusters which create a foundation for a more holistic theoretical synthesis of economic, social, environmental and spiritual dimensions.

Professor of Management at the Auckland Institute of Technology, New Zealand. Her research centres mainly around business and sustainability and corporate pathology. Most recently she has begun work in the area of stakeholder engagement exploring its much-vaunted potential for the achievement of sustainability.

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INTRODUCTION

It is commonly acclaimed that we live in an interconnected networked
world. Competitive and cooperative enterprises, suppliers, customers,
employees, regulatory authorities and related institutions and stakeholders are embedded in linked networks through a process of interdependent coordination. Interactions among these organisations form
webs of interconnection, and these webbed patterns, or structural
configurations, give rise to aggregated conditions of cohesion or disorder. Because of the informal organizing that occurs through this
generative structure, understanding how they function remains
ambiguous. Indeed, for those more familiar with linear-determined
supply chain management, these complex and interconnected territories can be extremely difficult to negotiate. The paper presents some
underlying governing formulae of how and what network organisation
means. Its purpose is to present a conceptual understanding of co-dependence, while using an empirical study as illustrative of this concept. The paper posits a view that organisations co-exist within a
broader community of webbed relations that include social, economic, environmental and cultural aspects. In this way, understanding
organisations requires a more embracive perspective of macro-organisation than has been conventionally viewed in management theory
literature.

The most established field of management research for understanding
macrolevel organizing dynamics is seen in the network structure literature. A key component of this literature focuses on the fluidity of networks, as the structural configuration can change regularly through
positional changes. While centrality, density and positional elements of
network theory have received significant attention, the embedded
nature of structural change within networks has been overlooked. Granovetter (1992), for instance, argues that on-going social relations act
as coordinating mechanisms which become a facet of the economic
vitality that emulates from that interaction. These interactions create
patterns that extend beyond the actions of individuals, and, Granovetter continues, the treating of relations and structures of relations as if
they had no history offers inadequate explanations of economic
behaviour. « In on-going relations, we do not start afresh each day, but
carry the baggage of previous interactions into each new one » (Granovetter (1992: 34). This suggests that rather than organisations conducting activities independently, they are embedded in networks of
relationships that affect others and are in turn, impacted on through
past activities. While relational embeddedness has a direct effect on
individual economic action, structural embeddedness more specifically indicates consequences of those actions that shape system-connected patterns at a macrolevel.

To date, there has been limited research into how the macrolevel structural properties may influence the growth and development of the network system. This becomes particularly important to strategists, as the
stockpiling that may occur within the network structure can assist in the
development of strategic capabilities that belong to the network. As
Kogut (2000: 423) notes, networks « are more than just relationships
[… they] constitute capabilities that augment the value of firms (…)
encoding coordination within and between specialised firms in specific
cooperative and competitive structures [so] that the “missing” sources
of value can be found ».

The question arises, then, as to how does the embedded structure
influence the growth and adaptability of an organisational network,
which incorporates its local context? Taking this approach, this paper
examines the role of structural embeddedness as an organising function as it explores the consequences of structural patterns. It takes a
longitudinal perspective from an ethnographic study of an icon tourism
destination network, focusing on the evolution and transformation of
the network macroculture. A case narrative is used to describe the
embedded structure of how past actions have affected the strategic
future of the network. This provides a context from which to identify a
deeper explanatory process of the macrolevel generative structures
than are generally observable from the surface (Pentland, 1999). Prefacing this data narrative and conceptualization process is a discussion
on the embeddedness debate.

STRUCTURAL EMBEDDEDNESS

Embeddedness has been defined by Marsden (1981: 1210) who
argues « the fact that exchanges and discussions have a history, and
this history results in the routinisation and stabilisation of linkages
among members. As elements of on-going social structures, actors do
not respond solely to individualistically determined interests. [… A]
structure of relations affects the actions taken by the actors composing it (…) by constraining the dispositions of those actors toward the
actions they may take ».

Granovetter (1992: 33) explains this more simply, in that embeddedness « refers to the fact the economic action and outcomes (…) are
affected by actors’ dyadic (pairwise) relations and by the structure of
the overall network of relations ». Much of the theorising on networks
has centred on relational embeddedness, with its emphasis on strong/
weak ties (Granovetter, 1973; 1985), trust building (Larson, 1992; Uzzi,
1996) and problem-solving (Uzzi, 1996). These relational theories
examine the sets of relations that build social cohesion and focus more
centrally on the dyadic relations and how they contribute to building the
network. The literature on knowledge acquisition, too, has taken a relational perspective (Gulati, 1998; Simonin, 1999; Dyer and Nobeoka,
2000), and to date, the aggregated structural patterns that result from
interactions and their implications for strategy have been less closely
examined (see Khanna, 1998; Uzzi, 1998; Gulati, 1999; and Gnyawali
and Madhavan, 2001).

Structural embeddedness shifts the focus from dyadic or triadic coordination activities to the network system. Underpinning this approach
is the extent to which a dyad’s mutual contacts are connected to one
another, with these aggregated patterns acting as a mechanism to
build social cohesion (Granovetter, 1992). The focus of this paper
therefore examines, not only the relationships that organisations have
with one another, but also those experienced indirectly through third
parties. These linkages bring different groups together, allowing the
transmission of information and common understandings to flow
across boundaries. As such, benefits accrue not only to the individual
firms, but also to the network as a whole, as the information and
resources are transferred through the interconnection of embedded
ties. Uzzi (1997: 134-135) declares: « Since an exchange between
dyads has repercussions for the other network members through transitivity, embedded ties assemble into extended networks of such relations. The ties of each firm, as well as the ties of their ties, generate a
network of organisations that becomes a repository for the accumulated benefits of embedded exchanges. Moreover, the longer an actor
has made embedded contacts within their present and past networks,
the more the benefits of embedded ties can be “stockpiled” for future
needs ».

Thus, structural embeddedness excludes a focus on atomisation and
dyadics; rather it is more concerned with exploring the structural history that has shaped the present situation and the aggregation that has
occurred from the subtleties of these interconnected on-going relations. The stockpiling of reciprocal obligations and the aggregated
effect on the network reinforces the importance of social relations as a
coordinating mechanism of embeddedness. As networks are fluid
forms in a constant state of movement, their current aggregated state
is a result of past interactions. The stockpiling of webbed interactions
plays an important role in the network’s organisation and contributes to
its strategic future.

Conceptually, structural embeddedness remains enigmatic. Those
who have endeavoured to explain the concept have referred to known
structural properties. For instance, Gulati (1998: 296) defines structural embeddedness as « the informational value of the structural position these partners occupy in the network ». He continues, « Actors
occupying similar positions need not be tied to each other. [… They]
reflect different status groups. [… S] tatus evokes a series of observable
characteristics associated with a particular position (…) in a social
structure that entails a relatively defined set of expected behaviors
toward other actors ». Gulati’s implicit referencing to centrality (Freeman, 1979) and strong tie redundancy (Burt, 1992) locates his propositions within current network theorizing which continues to offer a static representation of networks. We need further understandings of the
aggregation that results from on-going inter-relational configurations,
which underlies the essence of embeddedness.

Rowley, Behrens and Krackhardt (2000) synthesise their understanding
of structural embeddedness into avenues of network density. They
argue that relational and structural embeddedness have a closer interplay than is previously suggested, and they propose that firms operating
within dense networks require strong ties under conditions of exploitation and weak ties for exploration. They posit that structural embeddedness can be examined through governance implications, arguing that
like strong ties, dense networks serve as a trust-based governance
mechanism. They further state that in dense networks firms need less
strong ties and more weak ties for optimal performance. Thus, « [t]he
structure itself has produced behavioral norms to guide actions. (…) The
positive relationship between strong ties and firm performance is greater
in sparse ego networks than in dense ego networks” (Rowley, Behrens
and Krackhardt, 2000: 372). Again, while this statement assists us to
appreciate the implications of structural properties of networks, these
insights do not address the stockpiling that underpins embeddedness
and the accumulated aggregation that results.

Notable contributions for understanding structural embeddedness
have come from Jones, Hesterly and Borgatti (1997) who focus on the
web of affiliated patterns stemming from the structuring process. While
acknowledging the exploratory nature of their research, they profile
four themes that may unravel the social mechanisms for understanding structural embeddedness: macroculture, restricted access, reputation and collective sanctions. These themes act as the glue that binds
interests together in patterns or webs of integration. Of interest to this
paper are these authors’ insights related to macroculture, which offer
pertinent explanations of coordination within networks because of its
long term focus.

A macroculture is what Jones et al. (1997: 929) describe as « a system
of widely shared assumptions and values (…) that guide actions and
create typical behavior patterns among independents ». Macroculture
is said to evolve from webs of direct and indirect relationships, including the institutional environment and the culture within which the
organisations exist. Thus, macroculture emerges from the relational
system in which it is embedded. The more structurally embedded, (i.e.,
the more connected and frequently interacting), the more actors share
their values, assumptions and routines. In this manner, the macroculture is formed through action within the relational system, as structurally webbed patterns are crafted over time. Nevertheless, these
authors acknowledge that the architectural patterns and the formation
of conventions amongst actors and its institutional environment can
take decades to form, as they are established from reciprocal repeated interactions, reinforcing cultural beliefs and customs from previously autonomous organisations.

The identification of a network macroculture by Jones et al. (1997) is
strategically significant. Macroculture suggests that the network is an
independent unit of accrual, and that network forms have structural
properties that belong to the network rather than to individual organisations within it. In this instance, the macroculture is a property of the
network. As Zajac and Olsen (1993: 137) state, « Parties use the
interorganizational strategy to establish an on-going relationship that
can create value that could otherwise not be created by each firm independently ». This feature has gained further legitimacy in the strategy
literature, with both Dyer and Nobeoka (2000) and Kogut (2000)
demonstrating how the network is a repository of knowledge. Dyer and
Nobeoka (2000) provide a case illustration of the Toyota network and
Toyota’s ability to create and manage knowledge-sharing processes
with its suppliers. They reveal the process in which accumulated
knowledge is created within the networked group, through the establishment of rules for entry and participation, and show how this accumulated knowledge provides competitive advantage for the network.
Kogut (2000) scrutinizes knowledge interdependence further by illustrating how individual firms do not have independent ownership or
access to these compositions of knowledge, but rather the accumulation remains a property of the network. Organisations within networks
become interdependent as tacit knowledge is created, and this process reinforces the network as an independent unit of accrual. This
feature is strategically significant in that it acknowledges that the network configuration possesses its own structural form which holds the
knowledge repository of the network.

These contributions suggest that structural embeddedness refers to
the aggregated patterns of interconnection that have been built over
time, with networks providing a pertinent context to explore this phenomenon. Yet questions remain. How does structural embeddedness
act as an organizing mechanism within these interdependent and
aggregated networks? How do history (Marsden, 1981), reciprocity
(Powell, 1990) stockpiling (Uzzi, 1997), and macroculture (Jones et al.,
1997) shape the organisation and coordination of the network? What
is the importance of the aggregated patterns and how do they inform
our understanding of the strategy process? Finally, how does structural
embeddedness return organisational action into the context of local
community?

Thus, the overriding theme of this paper is to examine the role of structure as an organising mechanism, as interconnectivity accumulates
benefits or constrains the growth of the network for strategic leverage.
Because the focus is on developing deeper understandings and explanation of phenomena, a qualitative methodology is used, which
enables deep insights to be revealed that contribute to new conceptualisations and theory building within this domain. This is consistent with
a synthesised coherence approach, claimed by Locke and Golden-Biddle (1997) to be appropriate when our current understandings of
this concept are incomplete. The above issues are explored using in-depth data from a larger ethnographic study which examined the informal organising mechanisms that occur within the tourism destination.
The following section gives a brief outline of the case context before
describing the method of data collection and analysis utilised in this
research. Key features of network structure are then unravelled in the
data which offer insights into embeddedness and strategic capability-building.

THE WAITOMO CAVES TOURISM CONTEXT

The case study is set within an ‘icon’ tourism destination in New
Zealand, the Waitomo Caves. This isolated rural village is located within a limestone karst landscape, and is famous for its tourism attraction,
the Glowworm Cave. Unique to this cave is its fauna, the glowworms,
which twinkle in the dark cave like millions of stars in the night. The
forty minute tourism experience consists of a passive 200 metre amble
through grand and imposing limestone formations within the cave, followed by a mystical river float amongst the twinkling glowworms, each
one no bigger than a mosquito, which inhabit the narrow chambers of
the caves. This experience can be a highlight in the New Zealand
tourism experience, and 500,000 people make the excursion to Waitomo each year, in a country with a population base of 4,000,000.

The Glowworm Cave has been a major tourism attraction for more
than 100 years, and Waitomo has historically been a single-attraction
destination site with a heavy dependence on the day-trip coach market. However, a change in tourism patterns during the 1980s witnessed
a growing interest in free and independent travel (FIT) by the youth
market seeking adventure. This market created a new opportunity for
tourism in Waitomo with smaller specialist firms emerging to provide
caving adventures. So, today, two distinct production systems operate.
The core tourism product, the Glowworm Cave, remains an important
feature particularly within packaged coach tours of New Zealand and,
because of its short-stay, continues to operate independently within
the Waitomo destination. The caving adventures, however, require a
different type of production system, with symbiotic interdependencies
forming among the primary and support activities, such as transport,
food and overnight accommodation providers. This local production
network system, then, characterises a small, but dense network, with
complex inter-organisational dependence on both the ecological environment and the commercial market. This unique context enables illustration and understanding of structural embeddedness as these aggregated patterns have impacted on the development of the destination
network.

METHOD

Case data were collected over a five year period, 1996-2000. A mixture of formal interviews, archival data, informal conversations and
personal observations was used to gather information from the twelve
firms located within this destination site. These firms include the central organisation, the Glowworm Cave (with its operational licence held
by Tourism Holdings Ltd, a major tourism company in New Zealand),
three smaller adventure caving organisations, the Waitomo Caves
Museum and Visitor Information Centre, four accommodation
providers, a restaurant, and two supporting activities. Only the Glowworm Cave has independent corporate management, with the other
local participants all being privately owned small businesses. The
owner/manager of each organisation participated in four semi-structured ninety-minute taped interviews over the research period,
accounting for more than 100 hours of formal interviews for transcription. External agencies were also included in the data collection, as
local government, tourism agencies, and environmental government
agencies play an active role in the organising activities within this context.

Interviews focused on the nature of interorganisational collaboration
within the tourism destination. Because of the range of participants,
from tourism operators and regional councils to local community residents, a diversity of narratives were recorded, enabling a collective
memory to unfold. Typical of rural villages, many of these families had
lived in Waitomo for generations, and thus many oral histories were
accessible. This enabled an evolutionary and transformational perspective of the tourism destination to be crafted so that the structural
dimensions of embeddedness could then be reconstructed from both
the textual narratives and research-oriented observations and conversations. To illustrate this evolutionary structural connectivity, a visual
diagram of nodal interconnection was produced in accordance with the
format used by network analysts (Burt, 1992; Krackhardt, 1992; Madhavan, Koka and Prescott, 1998).

This research process conformed to a mid-range theorising, which, as
noted by Laughlin (1995: 81), is characterised by skeletal features,
with this metaphor « painting a picture of incompleteness yet also reasonable stability ». The role of the researcher becomes entwined with
the context and the two elements form the discovery process. While
the data are heavily descriptive, it is also analytical as « it complements
and completes the skeletal theory » (Laughlin, 1995: 81). These theoretical insights provide general discoveries which support a broad
understanding of relationships. Thus, through telling the stories, a ‘fabula’ (Pentland, 1999) is able to be framed in which underlying generative structures are identified. Weick (1995) calls this sensemaking,
where the researcher constructs deeper explanations to account for
the observed actions, and depends on one’s ability to look back retrospectively in order that we may construct an understanding of future
events.

In this way, the data were analysed in a manner that was consistent
with interpretative research methods. It began with the transcript texts,
which became centre stage as the researcher endeavoured to make
sense of the phenomena being studied (Locke and Golden-Biddle,
1997). Again, through the on-going reductionist process of data collection and data analysis (Huberman and Miles, 1994), the focus of the
research began to be narrowed through the years in the field, and participants too became more attuned with the nature of the inquiry. The
iterative process of highlighting related acts in the narratives enabled
major themes and events to be synthesised, some of which finally
emerged as significant. In this context, the thematic phenomena were
synthesised into several areas of network-based collaboration,
referred to in the forthcoming case narrative as collective groups. The
insights from this analysis are included in the following discussion,
which firstly reconstructs case data and then identifies macrolevel generative structures which expand upon our understandings of structural
embeddedness and its construction or constraint of network systems.

CASE DATA AND ANALYSIS

EVOLUTION OF THE DESTINATION NETWORK: ONE HUNDRED YEARS OF EXPLOITATION, 1887-1986

Tourism in Waitomo began in 1887, after local Maori chief, Tane Tinorau, showed the Glowworm Cave to his friend, British surveyor Fred
Mace. Mace immediately notified the New Zealand state government
of its existence, as the previous year an eruption of Mount Tarawera
which had destroyed the world famous Pink and White Terraces in
nearby Rotorua, claimed to be one of the great wonders of the modern
world. The Government immediately recognised that the Glowworm
Cave could be an important alternative tourism destination, and in
1903 it was nationalised under State management, ostensibly to
ensure its protection and conservation for future generations (Arrell,
1984).

By 1910, an embryonic destination had begun to develop. Alongside
the core attraction were transport (a regular coach service, a blacksmith’s shop and stables), accommodation (a private boarding establishment and the Government hostel which still forms the old wing of
the present Waitomo Hotel), and support activities (the general store).
The Government (through the state Tourist Department) retained control of the emergent destination with its governance of the Glowworm
Cave and the accommodation sector. Although simple, a complementary production system had emerged to provide a comprehensive visitor experience.

However, over the following 70 years, there was minimal investment
into the destination and little development and growth occurred. The
lack of structural change can be seen in Figure 1 which compares
the nodal structure of the destination in 1910 and 1986.

This limited change is surprising, because during these years, the
Government had responsibility for the provision and marketing of all
the key tourism activities within New Zealand: transportation, travel
agencies, and accommodation within the icon locations. Its influence
ensured that Waitomo remained one of the primary icon attractions in
New Zealand. However, the directional flows of this relationship were
one-way, as the Tourism Hotel Corporation (THC, a quasi-government
agency whose function was to manage the icon tourism attractions in
New Zealand) exploited large amounts of revenue from the caves with
little reinvestment returned to Waitomo. Indeed, in 1965, an editorial
cartoon in a national newspaper asserted that « now on holidays about
1,500 visitors queue at the Waitomo Hotel each day to pay as much for
their tickets as the caves cost » (New Zealand Herald, 1965: 14).

By the early 1980s, the destination was in a state of inertia. With no
information and resource flows into the destination, there was low
absorptive capacity within both the Glowworm Cave organisation and
the tourism destination network. Local people too were peripheralised
from any decision-making roles, which resulted in limited specialised
learning processes. Indeed, while conservation and protection of the
cave were the stated reason for government acquisition, there was little learning and knowledge development to enhance cave management. Thus, for nearly 100 years, the destination was managed
unmindful of the responsibilities that these specialised activities
required; for instance, the management of visitor flows (peak-time
overcrowding; carbon dioxide levels and glowworm populations; lighting systems to enhance visitor experiences), karst management practices (hydrology and temperature controls, water quality systems, limestone maintenance) and other important land management practices.
This meant that instances such as the reconstruction of the doorway
into the cave in 1979, causing a change in airflows and devastation to
glowworm populations, became a catastrophe because there was no
knowledge and memory of karst management in the structure of the
network.

Figure 1 - Comparison of the Nodal Structure in Waitomo: 1910 and 1986

By 1986, the Glowworm Cave had been operating as a major tourist
attraction for 100 years and while a few complementary attractions
existed within the area, a comprehensive tourism destination had
never really developed. The only additions to the destination were a
museum and a lunch-time restaurant catering to the rapidly growing
Japanese coach market. Capital development into Waitomo by the
THC included the construction of a small shop, administrative facilities
and toilet block in 1982 outside the Glowworm Cave, and while adequate for the 225,000 visitors at that time, there was no provision for
the significant growth that was about to occur.

The data offer pertinent insights into structural embeddedness, particularly as a comparison with the following case data sections. A key
notion of networks is their constant state of fluidity that emerges from
the webbed interactions occurring through the structural history of the
network. It is clear from both these data and Figure 1, that there was
little fluidity and adaptability in this destination over its 100 year history. Indeed, the structural history indicates meagre growth in enterprise
activity during this time, despite Waitomo being a major tourism destination. While the THC had impressive links with national tourism sectors, there were no additional linkages with other organisations within
Waitomo. This restricted access, noted by Jones et al. (1996), results
in status maximisation as the central firm interacts only with firms of
equal status. In this case, the ties developed by the THC were outside
of the destination with benefits accruing only to the external status
organisations. Through this strategic reduction, the THC separated
itself from the wider community within which it was embedded, thus
denying the mutual learning opportunities that can evolve from
reciprocity. The macroculture of this network was based upon constraint, separation and inertia which contributed to low adaptability,
resulting in a stagnation of destination vibrancy, as evident in the single-attraction destination history. The central organisation was organised as an isolated node, with no connections flowing into the community, resulting in little social cohesion.

RADICAL CHANGE AND EVOLUTION OF THE TOURISM NETWORK, 1987-

The dramatic growth in international visitors to New Zealand during the
late 1980s, the inert state of the THC and the growing frustrations within the Waitomo Caves community all crystallised into major upheavals
over the following decade. First, a major impact on the Waitomo destination was the ‘revestment’ of land. On 14 June 1990, 20 hectares of
land, which included the Glowworm Cave, were returned to the families of the original Maori landowners as part of the settlement of land
claims under the Treaty of Waitangi. This meant that for the first time
since the land confiscations in 1903, Maori were included in strategic
decision-making within the tourism destination. Second, the State (the
THC) sold its interest in the Caves and Hotel, with the cave operations
being leased by Tourism Holdings Limited in 1996.

Finally, adventure tourism arrived. With its unique limestone karst formations, flora and fauna, the Waitomo Caves region offered splendid
opportunities for participation in leisure, environmental and aesthetic
experiences. In 1987, Blackwater Rafting (BWR) was formed by two
local residents who foresaw the potential in commercialising the ‘laundry trip’, a fun trip that recreational cavers used to clean their clothes
after caving. Suited out in wetsuits, the rafters and guide walked
through native bush reserve and after entering the cave, floated down
the river stream in tyre tubes amidst the darkness and glowworms of
the neighbouring capacious Ruakuri Cave. Shortly afterwards, a second adventure enterprise, Waitomo Adventures (WA), was initiated by
a non-local person, who came to Waitomo expressly to develop the
Lost World adventure tourism business, which involved a 100-metre
abseil into the cave shaft. The third adventure operation, Waitomo
Down Under (WDU), began operating in 1992. With its owners being
part of the Maori community, this organisation had a uniquely indigenous perspective.

These new ventures provided more authentic and compelling personal
experiences than that of the passive Glowworm Cave, and their arrival
was described as changing the nature of tourism in Waitomo as they
brought back overnight stays. By the year 2000, 50,000 people came to
Waitomo each year to participate in adventure caving. Numerous support activities too were developed to complement the caving activities:
backpacker lodges, horsetrekking, a guest lodge, canoe caving, an
agricultural pioneer show and jet-boating alongside the original camping-ground and general store. While the population of this village
remained a constant 300 people, 200 full-time equivalent jobs were
now located within Waitomo. The core Glowworm Cave product
remained the icon attraction, but the adventure caving products created a new market complementing the primary activity and added supporting activities to extend the value of the destination. The nodal structure of the network in the year 2000 is illustrated in Figure 2.

The last fifteen years have seen a significant structural change in Waitomo, and Figure 2 depicts a more complex nodal configuration than
the 1986 structure presented in Figure 1. For the first time, multiple
exchange relationships began occurring in the destination as visitors
were passed from one supplier to the next, and an ecosystem of interdependence began to develop.

However, the collective memory of the destination remembers this
absence of learning, and the exploitative structural history of Waitomo
continued to impact throughout the 1990s. Following the sale of THC,
the Glowworm Cave continued its simple routines with little information
sharing and absence of knowledge creation processes. Its routines
mainly involved profit retention and focused largely on guiding visitors
through the cave. Administrative technologies were limited to telephones and faxes until 1996, and while a research institute was contracted to assist in the measurement of cave hydrology, there was no
insistence on the analysis and interpretation of results until the mid-
1990s. It was not until Tourism Holdings acquired the lease of the
Glowworm Cave that specialist systems and processes were developed.

This preceding section illustrated how the structural history of exploitation lingered and the central organisation was unable to initiate leadership within the emergent network. Rather, the newly emergent
organisations, with their own portfolio of ties, provided bridges for
many structural holes as they seized opportunities and introduced new
ideas. Network change, illustrated in the following section, occurred
through the more peripheral organisations, unencumbered by the
structural constraints, as they endeavoured to develop learning capabilities in the destination.

CAPABILITY BUILDING WITHIN THE NETWORK

As the destination changed from a single attraction short stay to a
wider collection of adventure activities requiring overnight stays, so did
the exchange of information and sharing among tourism suppliers,
which has resulted in the development of a network-based capabilities.
Capabilities are what Eisenhardt and Martin (2000: 1107) describe as
« the antecedent organisational and strategic routines by which managers alter their resource base to generate new value-creating strategies ». When these resources integrate complementarities, they can
become activity-related systems that have the potential to create sustained competitive advantage. The original data analysis identified
several areas of interdependent collaboration that have the potential to
build network-based strategic capabilities, contributing to the stockpiling of benefits for the future leverage of the network. While a more
comprehensive analysis of these capability developments can be read
in Pavlovich (2003), three of these groupings are briefly described, as
these structural configurations play a significant role in the subsequent
theoretical implications.

Above-Ground Landcare. The first and most robust of these collaborative groups was the above-ground Waitomo Landcare Group formed
in 1992. Facilitated by the Regional Council, Environment Waikato, the
group included the local farming community (donating land to be
fenced and replanted), tourism operators (contributing financial
inputs), community members (providing voluntary labour) and other
outside institutions (Waitomo District Council, Department of Conservation, and universities). The purpose of the Landcare Group was to
protect the Waitomo Caves system from sedimentation through appropriate and sustainable land management practices. Collaboration
among these internal and external stakeholders included fencing off
the waterways and forest replanting programmes, primarily to improve
water quality for sustaining glowworm populations and the cave environment. The group is promoted nationally as a ‘best practice’ example of a Landcare group. Its initial purpose of improving the longevity
of the cave environment has been achieved, and the participation of
the community has resulted in widespread consensus and acceptance
of the land management practices to sustain the destination environment.

Adventure Risk Management. The second collaborative group
involved managing the risk attached to the underground cave environment. Given that caves are dark, cold, wet and often confined spaces,
the ability to manage these potentially risky and dangerous situations
requires an advanced standard of guiding to ensure client safety. This
network-based capability has been developed in three ways. First,
informal information exchanges among operators in Waitomo enabled
better safety practices, stemming from experience of their own organisational routines. A second mechanism occurred through the formation of the Waitomo Caves Rescue Team, with specialist guides from
the adventure caving organisations working together in emergency situations—most commonly arising from situations involving recreational
cavers. Finally, the adventure caving organisations in Waitomo have
been instrumental in building caving standards throughout New
Zealand, as their systems and standards have been incorporated into
institutional frameworks. Thus, these organisations are seen as adventure sector leaders in New Zealand.

Waitomo Caves Marketing. The third area of collaborative activity
involves marketing. First, there is the Destination Waitomo Group,
which involves local operators. The main focus of this group is
brochure development to reach domestic marketing channels, as international marketing is the focus of a government body, Tourism New
Zealand. Second, the association with Tourism Holdings, licensee of
the Glowworm Cave, brings many benefits to Waitomo through its centrality in the New Zealand tourism industry. Connections with major
operators such as Air New Zealand and Tourism New Zealand, mean
that much of the destination’s marketing occurs through these rich
external connections.

NETWORK ATTRIBUTES

The above capabilities demonstrate the nature of knowledge development in the network. Building on the case data from the network capabilities, three important attributes of networks emerge as important in
developing the social glue that coordinates a structurally optimal adaptive network. This involves having a cohesive portfolio of strong and
weak ties (Uzzi, 1997), and the presented collective groupings from
the data confirms this. Three attributes achieving this cogency include
heterogeneity, interconnection and reciprocity. While not mutually
exclusive, each offers pertinent insights into understanding how
embeddedness can impact on the structural configuration for strategic
leverage, as discussed below.

Heterogeneity. The Waitomo network is configured from complementary nodes: transport, accommodation and core attractions, with closer and denser ties being developed as customers are passed from one
supplier to the next. This heterogeneity assists the collaborative
endeavour, as related and unrelated organisational activities complement each other more readily than direct competitors. Uzzi (1997)
claims that by adding diversity, partners’ strengths can compensate for
others’ weaknesses, which allows a more comprehensive range of
actions than if the nodes existed alone. Thus, complementarity underpins the characteristics that different ties can reinforce in the network
configuration.

The importance of heterogeneity relates to its nodal complexity. Each
node has access to independent sources of information. Unlike the
constraining central structure under the THC, the movement to a multi-centred ‘hydra’ network (Liu and Brookfield, 2000) has enabled the
network multiple access points to new information. This means that no
node has significant control over others in the network, as each node
has the ability to develop independent ties. This complementary configuration encourages heterogeneity rather than duplication of current
patterns. This is clearly evident in the Waitomo Landcare Group,
which, as noted earlier, is comprised of a number of sectors contributing complementary skills and activities. In this group, there is minimal
replication of similar activities; rather there is rich differentiation and an
appreciation of the different tasks, resources, and outcomes that build
the land and karst management capability. Indeed, this heterogeneity
is illustrated by the diversity of groups involved in the project: tourism
operators, farm owners, local residents, local and regional government, environmental groups. Each group contributed different
resources, skills and knowledge to the karst management programme.
Although initiated by residents in 1992, local government was instrumental in facilitating the group, and it brought new sources of expertise
regarding the interconnection of the twin landscapes that have protected the underground cave hydrology and glowworm populations.
Local residents brought their passion and commitment. Commercial
operators, who assisted in funding the programme, are now required
to include cave and karst conservation issues in their asset management plans, and visitors to this region are educated on these principles
through tourism product delivery processes. As most of the businesses are locally owned and tourism is the central employer within this
region, accountability becomes a more transparent practice in this network. This heterogeneity has been a key factor in assisting the collaborative organising phenomena.

Interconnection. While heterogeneity focuses on organisational
diversity (nodes), interconnection concerns the quality and intensity of
the ties, and the above landcare data illustrate how interconnection
acts as a conduit for information and resource flows. While Environment Waikato initiated the central organising role, its function diminished as the group developed and became self-organising. By this
stage, the interconnections were linked through collective norms, task
responsibility and trust, as sharing permeated the group. This group
demonstrated strong and intense ties over multiple tasks, and it can be
contrasted with the less complex connections that occurred within the
destination regarding formal marketing activities. The marketing group
was less optimal, with external marketing connections aimed more
specifically towards Tourism Holdings, rather than flowing through all
network nodes. The risk management group illustrated a third configuration, with key organisations strongly connected to the institutional
environment. This endorsed their legitimacy, and assisted local groups
in becoming involved with the interdependent issue. Together, these
collective groups demonstrate how these connections between the
nodes become the vehicle for transmitting information through the network, and the case data indicated how the flows back and forth are the
social glue that exist in the present to build the future, but based on the
past.

Reciprocity. Achieving adaptive vibrancy in the network, however,
required collaborative flow between the nodes, which is based on sharing and reciprocity. Reciprocal flows (as referenced by Granovetter,
1985; Powell, 1990; and Uzzi, 1997) require two-way flows between
nodes. For learning to occur, the information that is exchanged needs
to be acted upon. This creates an obligation to return further information, whether to the original source, or to another. It is this reciprocal
obligation that assists in stockpiling knowledge into the structural
memory as it flows through the network. Reciprocity becomes strategically important to embeddedness as it includes open-ended relationships which are built up over indefinite time frames, as noted by Powell (1990). Hence, the exchanges may not appear equivalent at any
immediate point, yet the embedded stockpiling network finds an equivalence through the structural history of the network. An example of this
involves cave monitoring, with the commercial longevity of the destination reliant on karst management processes. Yet, evidence that
there was little understanding of this was foreshadowed by the closure
of the Glowworm Cave for four months in 1979 after the cave
entrance-door was replaced. If this closure was to occur today, all
tourism organisations would be seriously affected. Eight years after a
destination karst management plan was installed, there is now a comprehensive data base of environmental and hydrology conditions that
is accessible for all operators in Waitomo. Indeed, tourism operators
using other caves work with the Glowworm Cave, the Department of
Conservation and the regional council to provide inputs and data into
central systems to understand the complex interrelationships of visitor
flows, glowworm populations, hydrology, and water quality systems.
This demonstrates the function of reciprocal information sharing as a
prerequisite for building network knowledge repositories.

CONTRIBUTIONS TO STRUCTURAL EMBEDDEDNESS

The above data illustrated the development of strategic capabilities
from the collective groups through structural optimisation of ties that
emerged from network heterogeneity, interconnection and reciprocity.
These strategic capabilities confirm, as Kogut (2000) noted, compositions of knowledge that become accumulated properties of the network, whereby individual firms do not have independent ownership of
or access to. This is evident in that each organisation connected with
Waitomo is dependent on sustainable management of this cave
resource, realised through the development of strategic capabilities of
landcare, risk management and commercial marketing. This reinforces
the aggregation of actions into system-based networks, as earlier referenced in the literature. However, unlike prior research which has
retained existing network theoretical constructs of positional attributes
(Gulati, 1998) and density (Rowley et al., 2000), this paper presents
new contributions for understanding structural embeddedness which
expand the macro perspective initiated by Jones et al. (1997).

First, we offer further insights into the function of structure as a coordination mechanism. Second, we examine structural equivalence and
how it impacts on the embedded nature of interdependence. Throughout this discussion, we argue that a reframing is required in how we
view the role and function of organisations, as the data clearly indicated economic vitality only occurred when organisations were collaboratively engaged with their local context.

The first contribution illustrates how the structure acts as a coordinating mechanism. A key feature of networks not previously addressed in
the literature, is their anti-hierarchical structure. With their complex
structure of nodes and interconnections, any point can be connected
to any other point. This is clear in the tourism case study, where suppliers have multiple connections with other organisations through product/market synergies, problem-solving activities, employee movements and social ties. This leads to a second dynamic, where no node
in the network structure comes before another. Thus, tourism visitors
can begin their experience at any point they wish, whether a tourism
activity, food and sustenance, or accommodation needs. This is in contrast to hierarchies (manufacturing, for instance), which require linear
flows of activities. A final feature of anti-hierarchy is that no point is
specifically connected to another point, and connections can change
from day to day. Because of this fluidity, there is a constant modification of the connections to allow the inflow of new information and
resources that enable creation and dispersion through the structure.
Verifying this is the contrast with Figure 1 which demanded a specific point of entry with a linear flow between nodes. This formalisation of
structure inhibited the destination fluidity and adaptability. To make this
anti-hierarchical structure more explicit, it can be likened to the structure of the underground caving system—a network of underground
tunnels, each connecting with others, seemingly going nowhere, and
yet together creating an amorphous whole.

This anti-hierarchical structure leads to a second insight, in that it
enables multiple possibilities of strategic connection (a term adopted
from Deleuze and Guattari, 1987). Through the network properties of
heterogeneity, interconnection and reciprocity, there are an infinite
number of structural possibilities, a myriad of alternative patterns,
which may form within the interdependent network. Any point can and
must be connected to any other point to create structural coherency. It
is the aggregation of those possibilities that may create strategic capabilities for the network. Indeed, this illustrates the significance of the
capabilities earlier described: landcare, risk management and commercial marketing capabilities, each of which were created after the
network emerged. Thus, the multiple possibilities occur through the
nodes and connections. When reciprocal learning relationships are
added to the configuration, knowledge repositories are able to be
formed. This suggests that when collaboration and learning occur in a
network, an indefinite number of strategic capabilities have the potential to be formed, dependent only on the intensity of the structural connections. It is through these aggregated connections that Waitomo has
currently become a more vibrant and appealing destination than during its earlier 100 year history. Thus, through the structure, there is an
interdependent pattern of organisation and self-renewal. The structural
coupling that occurs through the network nodes (multiple possibilities)
can develop in any direction with no-predetermined territory; with only
their history hinting at potential patterns.

In this way, all nodes in the structure play an active role in the network’s coordination, as they all have the potential to grow and develop
in new directions. This brings forth a second contribution, that of structural equivalence and its effect on embeddedness. If no point within the
web is more fundamental than the others, each dynamic link contributes equally to the functioning and overall patterning of the entire
system. This directly correlates with the anti-hierarchical nature of network structure, whereby any point can connect and no point is more
important than any other. Thus, the interactions between nodes may
not appear equal, but the embedded stockpiling network finds an
equivalence through the structural history of the network. This critiques
Burt’s (1992) proposition of structural redundancy, as in this analysis,
the seemingly redundant ties play pertinent roles in the stockpiling over
the network’s lifetime. This is evident in that the history of exploitation
in Waitomo remained in the structural memory of those peripheralised
from economic activities. Yet, while seemingly redundant commercially, those peripheral ties and embedded memories have become strategically significant in the emergent network. The return of the Glowworm Cave to the indigenous Maori families is one example of this,
where after 100 years of absence from tourism, Maori are now
landowners of the icon tourism attraction. This absence, however, has
demanded significant learning curves to overcome knowledge deficiencies. Thus, the nature of reciprocity, obligation and equivalence
are much less precise in a network system and involve longer term
time frames for understanding the stockpiling of the interactions that
may occur.

Finally, these elements demonstrate that for cohesive functioning of
network systems, a change in consciousness is necessary. This
research puts forward an alternative mechanism of organising, whereby network coordination occurs through structural attributes of participation. Although context specific, these case data demonstrated the
stockpiling mechanism: competitive and isolation processes stymied
network and community development, while inter-organisational collaboration enabled coordinated adaptive learning to occur throughout
the system. This suggests that economic prosperity is based upon a
vibrant community sustained by a web of interconnected relationships.
Thus, a fundamental shift in economic practices is required: from the
defensive protective stance of profit maximisation for individual firms,
to an acknowledgement of knowledge creation and network-based
sustainablity through cooperation. It is this change in philosophy that
enables structural embeddedness to take its form, through understanding that while all possible patterns have the potential to form, only
those working with collaborative consistency will last.

CONCLUSION

The paper has taken a conceptual approach towards structural
embeddedness and offered deeper insights into the current, but
incomplete, understandings of this field of study. Most specifically, it
has examined how structural embeddedness assists or impedes organization within networks, and the case data were able to illustrate both
constraint and construction through interconnection. The data indicated how heterogeneity and interconnection assisted the reciprocal
flows of resources and information for the development of strategic
capabilities. These are unique in that they encompass both commercial and non-commercial aspects that reside in the network structure.
An important feature of networks is their anti-hierarchical state and
multiple possibilities that can be leveraged through on-going reciprocal, but not equivalent, social ties. This fluidity assists the network to
grow, adapt and evolve. In this way, the structure acts as a vehicle for
information transfer and knowledge repository, and acts as a memory
of historical activity. In seeking this explanation, the paper has
addressed its original inquiry of offering further understandings of
structural embeddedness as an organizing mechanism. Through the
historical evolution of the network, current theoretical constructs of history, reciprocity, stockpiling and macroculture were confirmed. However, most importantly, the data illustrated the role and function of the
aggregated patterns of interconnectivity, and how they offered pertinent insights into the formation and development of strategic capabilities that belong to the network. Yet, a necessary precondition is understanding that organisations exist within broader structures, and that the
collaborative coordination process is vital to creating and maintaining
these strong and vibrant communities.

Krackhardt, D. 1992
The Strength of Strong Ties: The
Importance of Philos in Organisations,
in N. Nohria and R. G. Eccles (Eds.),
Networks and Organizations: Structure,
Form and Action, Boston, MA: Harvard
Business School Press, 216-239.

Résumé

English

This paper examines the role of structural embeddedness as an organising phenomenon within interdependent networks. While conceptual and philosophical in nature, data from a longitudinal ethnographic case study of an icon tourism destination is used to illustrate new framings of this concept. This method of research enables deeper insights to be attained that add both explanation and understanding to our current appreciation of the interdependent organizing phenomena. The case data illustrate how the network has structural attributes of heterogeneity, interconnection and reciprocity that contribute to its anti-hierarchical state. This enables an infinite number of structural possibilities to occur, some of which can be developed to form strategic capabilities that belong to the network. Assisting this process, is a symbiotic and mutual participation from the interdependent actors which critiques the notion of structural redundancy. The paper illustrates how the aggregated patterns have formed in the network and how reciprocal obligation has built long term exchange patterns that contribute to forming the embedded macroculture.